Schinner v. Gundrum
| Decision Date | 12 July 2013 |
| Docket Number | No. 2011AP564.,2011AP564. |
| Citation | 833 N.W.2d 685,2013 WI 71,349 Wis.2d 529 |
| Parties | Marshall SCHINNER, Plaintiff–Appellant, v. Michael GUNDRUM, Defendant, West Bend Insurance Company, Defendant–Respondent–Petitioner. |
| Court | Wisconsin Supreme Court |
OPINION TEXT STARTS HERE
For the defendant-respondent-petitioner, there were briefs filed by Jeffrey Leavell and Christopher John Koppes, and Jeffrey Leavell, S.C., Racine, and oral argument by Jeffrey Leavell.
For the plaintiff-appellant, there were briefs by Keith R. Stachowiak and Murphy & Prachthauser, S.C., Milwaukee, and Daniel P. Patrykus and Keberle & Patrykus, LLP, West Bend, and oral argument by Keith R. Stachowiak.
An amicus curiae brief was filed by James A. Friedman and Linda S. Schmidt, and Godfrey & Kahn, S.C., Madison, on behalf of the Wisconsin Insurance Alliance, and oral argument by Linda S. Schmidt.
An amicus curiae brief was filed by Mark L. Thomsen and Cannon & Dunphy, S.C., Brookfield, on behalf of the Wisconsin Association for Justice.
[349 Wis.2d 533]¶ 1 This is a review of a published decision of the court of appeals 1 reversing a grant of summary judgment by the Washington County Circuit Court 2 to West Bend Mutual Insurance Company (West Bend) 3 against one of its insureds.
¶ 2 The insured, Michael Gundrum (Gundrum), hosted an underage drinking party. One of Gundrum's many guests, Matthew Cecil (Cecil), assaulted and seriously injured another guest. Gundrum knew that Cecil had a tendency to become belligerent when he was intoxicated but he permitted Cecil to drink anyway. The victim, Marshall Schinner (Schinner), ultimately sued Gundrum and West Bend to secure damages for Schinner's injuries.
¶ 3 West Bend disputed coverage. The insurer argued that it had no duty to defend and indemnify Gundrum because his actions as a party host were intentional; thus, there was no “accident” and no “occurrence” under the Gundrum family's homeowner's insurance policy. West Bend also contended that even if there were an occurrence under the policy, there was no coverage because of an exclusion in the policy for bodily injury arising out of a non-insured location. The party had been held at a shed at Gundrum Trucking, a family-owned business that was not an insured location under the homeowner's policy.
¶ 4 The circuit court granted summary judgment to West Bend because it determined that there is no accident when someone intentionally procures alcohol for an underage drinking party, and even if Gundrum's actions were an accident, the victim suffered bodily injury at an uninsured location.
¶ 5 The court of appeals reversed on both issues. The court of appeals concluded that there was an occurrence because Schinner's assault was an accident when viewed from the standpoint of either the injured person (Schinner) or the insured (Gundrum). The court of appeals also concluded that the non-insured location exclusion did not apply because Schinner's injury did not arise from some “condition” of that premises.
¶ 6 The primary question before us is whether Schinner's injury resulted from an occurrence as defined by the West Bend homeowner's insurance policy, thus triggering coverage for Gundrum. If the answer is yes, we are required to determine whether that coverage was excluded because the injury “arose out of” an uninsured location that was not “used in connection with” an insured premises under the homeowner's policy.
¶ 7 After carefully considering the facts in the record, the allegations in Schinner's complaint, the pertinent language in the homeowner's insurance policy, and our previous interpretations of “occurrence” in insurance policies, we reverse the court of appeals and reach the following conclusions.
[349 Wis.2d 535]¶ 8 First, Gundrum's actions in setting up an isolated shed for a drinking party, procuring alcohol and expecting others to bring alcohol, inviting many underage guests to the party, and encouraging the underage guests to drink—especially an underage guest known to become belligerent when intoxicated—were intentional actions that violated the law. Gundrum's many intentional wrongful acts were a substantial factor in causing Schinner's bodily injury. Viewed from the standpoint of a reasonable insured, Gundrum's intentional actions created a direct risk of harm resulting in bodily injury, notwithstanding his lack of intent that a specific injury occur. Thus, Schinner's bodily injury was not caused by an “occurrence” within the meaning of the policy, and West Bend is not obligated to provide insurance coverage for Gundrum.
¶ 9 Second, even assuming there was an occurrence under the West Bend homeowner's policy, coverage is excluded because the injury arose out of the use of an isolated shed for an underage drinking party on uninsured premises. The fact that the Gundrums kept some personal property insured under the policy at the shed did not make the shed a premises used in connection with the insured's residence, as those terms are defined in the policy. Thus, the business shed was not an insured location triggering coverage under the homeowner's policy.
¶ 10 The facts of this case are derived from Schinner's Second Amended Complaint against Gundrum and West Bend, witness statements, police reports, Gundrum's deposition, and the West Bend insurance policies of record.
[349 Wis.2d 536]¶ 11 In December 2008 Gundrum, then 21, resided with his parents, Scott and Teri Gundrum, at their residence on State Highway 144, near Slinger, Wisconsin. The Gundrums had purchased a Home and Highway 4 policy (homeowner's policy or the policy) from West Bend covering their residential premises. The homeowner's policy contained personal liability coverage for persons insured under the policy, including Gundrum.
¶ 12 The personal liability coverage applied to an “occurrence”:
A. Coverage E—Personal Liability
If a claim is made or a suit is brought against an “insured” for damages because of “bodily injury” or “property damage” caused by an “occurrence” to which this coverage applies, we will:
1. Pay up to our limit of liability for the damages for which an “insured” is legally liable....
2. Provide a defense at our expense by counsel of our choice....
¶ 13 The homeowner's policy defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”
¶ 14 The policy contained an exclusion for bodily injury or property damage liability arising out of a premises that is not an “insured location.” 5
¶ 15 The homeowner's policy also defined an insured location in part as, “[t]he residence premises,” the “part of other premises, other structures and grounds used by you as a residence,” and any premises used by the insured “in connection with” the premises described above.
¶ 16 West Bend had also issued a commercial general liability (CGL) policy to Howard, Jan, Scott, and Guy Gundrum, doing business as HJSG Enterprises, located on Arthur Road near Slinger. The facilities at this address were commonly referred to as Gundrum Trucking,6 where the events in question took place. Because of its liquor exclusion clause, HJSG's CGL policy is not at issue in this case.
¶ 17 On December 14, 2008, Gundrum hosted a party in a shed at Gundrum Trucking. The party lasted into the early morning hours of December 15. It was not the first party hosted by Gundrum at the shed. Gundrum testified in a deposition that there was at least one prior party,but other witnesses recalled multiple prior parties.7
¶ 18 As with previous parties, Gundrum texted friends about the party and expected his friends to text or tell others, ensuring a well-attended party. Gundrum later estimated that more than 40 partygoers came to the shed on the night of December 14. He also estimated that 40 to 50 percent of the people were under the age of 21.
¶ 19 The site of the party was a pole barn approximately 40–by–60 feet in size. It had no windows. This shed was used by the trucking company, but it also stored some personal property belonging to Gundrum's extended family. The property included boats, a camper, and two snowmobile trailers. Gundrum's immediate family stored snowmobiles in the shed. These snowmobiles were insured under the Gundrums' homeowner's policy. Gundrum referred to the shed as the “toy shed” because of “all the junk that's piled in there.”
¶ 20 A portion of the shed was set up for parties. It was furnished with couches, chairs, a table, a Ping–Pong table, a CD player, and a refrigerator. The law enforcement personnel who responded to Schinner's injury described the atmosphere in the shed as consistent with an “underage alcohol party.”
¶ 21 Alcohol was prevalent at the party, despite the fact that up to half of the guests were underage. Some guests brought their own alcohol; underage guests expected to obtain alcohol from people who were of legal drinking age. Gundrum purchased two cases of Busch Light beer for a friend and himself. He kept the beer in the refrigerator but admitted that it was available for people who did not bring their own alcohol to the party. Law enforcement officers reported a “large amount of alcoholic beverages” in the shed, and Gundrum was aware that guests were becoming intoxicated from the alcohol at the party. In fact, Gundrum himself stopped drinking when he realized that so many guests showed up and became intoxicated. He claimed that he wanted to monitor the situation. Nevertheless, alcohol consumption at the party continued. One of the party games, “beer pong,” utilized the Ping–Pong table in the shed and encouraged more alcohol consumption.8
¶ 22 Cecil was one of the intoxicated underage guests who participated in beer pong during the party. He was known by Gundrum and others to become belligerent when intoxicated. Gundrum testified that he knew from previous occasions that Cecil would become confrontational, had a history of picking on weaker kids,...
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